trading down behavior post recession

8/6/2019 Trading Down Behavior Post Recession

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Trading Down Behavior Post Recession

Pallavi Priyanka Shambu Nandanan

Swapnil Salvi

Trishna Jobanputra Vikram Baheti


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* Brown, 2010

Trading down is where customers opt for a less luxurious but more affordable substitute rather

than the product or brand they prefer mainly due*.to economic downturn It may also be factored as

few customers reduce the amount of consumption for few products but still continuing to use the.same brand

The consumers started making more mindful choices

and conservative shopping preferences as opposed

.to impulse buying The customers are ready to replace their preferences for a small drop in, .quality and a substantial drop in prices

Trading Down


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* Nielsen 2009

According to the Nielsen survey

One in three global consumer will continue to economize on gas and

electricity One in six will continue to cut down on

take away mealsOne in six global consumer will continue

,to purchase cheaper grocery product spend,less on new clothes cut down on out of

home entertainment and one in seven will.*reduce telephone expenses


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* Weidauer, 2009

Trading Down Behavior - , ,Broad scale trading down across products brands

and retailers will give way to more reasoned and.rational purchases

- , . .,Deal seeking behaviour e g taking advantage of

, , ,sales using coupons comparison shopping will not- .be completely abandoned post recession (Private label brands especially in Fast Moving

)Consumer Goods categories will remain a significant factor due to their high quality at

.*lower prices


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* Nielsen, 2009

Four key trends in the

*new marketA demand for simplicityA call for ethical business governance A desire to economize A tendency to flit from one offering to

.another


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Objectives

To observe the trading down behaviours of customers post economic recovery

Whether customers stick to the recessionary habits

or do they return to their preferred productsHow the purchase decisions are affected during and post recession?

Has private labels gained market share during and post recession and are they going to stay for

long?


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Research Methodology Sample Size : 250 Sampling technique : Simple Random

Sampling Simple Random Sampling

Nominal Scale

Ordinal Scale (4- Point Likert Scale) Interval Scale


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Tools Used Factor Analysis Cross Tab Analysis Chi-Square Significance Test Correlation Coefficient Analysis Percentage Analysis


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demography

82% Female, 18% Male 78.4% families in Services and 21.6% families inBusiness

Ethnicity: 28% North, 22.4% South, 16.4% East and 33.2% West

Age Groups: 39.2% in 0-29 yrs, 35.6% in 30-39 yrs, 19.6% in 40-49 yrs 5.3 % above 50 yrs


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..preference factors contd

Quality concerned and brand loyal demography not worried about prices(negative correlation between factors)

Advertising/Marketing and Sales and Promotional Activity factors consideredsynonymous (high positive correlation)

Correlation Analysis

-ost Re ce ss iono st Re ce ss ion Prices of the

Product Quality of the

product Availability

of the product Brand name Previous

experience/Advertising

Marketing Family Friends

Opinion Sales and

Promotionalactivity

Correlation Price of the product

1 - .0 064 - .0 188 - .0 177 .0 127 .0 109 - .0 094 .0 159

Quality of the product - .0 064 1 .0 104 .0 074 .0 045 .0 001 - .0 025 .0 135

Availability of theproduct

.0 188 .0 104 1 .0 024 - .0 094 .0 052 .0 279 - .0 019

Brand name

- .0 177 .0 074 - .0 024 1 .0 073 .0 102 .0 028 .0 053

Previous experience

.0 127 .0 045 - .0 094 .0 073 1 .0 354 .0 277 .0 54

/Advertising Marketing .0 109 .0 001 .0 052 .0 102 .0 354 1 .0 253 .0 602

Family Friends Opinion

- .0 094 - .0 025 .0 279 .0 028 .0 277 .0 253 1 .0 206

Sales and Promotionalactivity

.0 159 .0 135 - .0 019 .0 053 .0 54 .0 602 .0 206 1


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- -Comparing the pre recession and post recession consumer preferences for

purchase

Extraction Method: Principal Component Analysis.Rotation Method: Varimax with Kaiser Normalization.a. Rotation converged in 5 iterations.

AnalysisFactor1: Primarily a measure of sales and promotional activity but also increases with the increasing scores of

Advertising/Marketing and previous experience. As each of these variables increases so do the other two.Factor2: Primarily a measure of Availability of the product. It is also influenced by Family and friends opinion.Factor3: Primarily is a measure of Brand name only.

Factor Analysis

re Recession


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-Comparing the pre recession and-post recession consumer

preferences for purchase

Extraction Method: Principal Component Analysis.Rotation Method: Varimax with Kaiser Normalization.a. Rotation converged in 5 iterations.AnalysisFactor1: Primarily a measure of sales and promotional activity but also increases with the increasing scores of Advertising/Marketing and

previous experience. As each of these variables increases so do the other two.Factor2: Primarily a measure of Availability of the product. It is also influenced by Family and friends opinion.Factor3: Primarily is a measure of Brand name only.So we can infer from the trends that the Shopping behaviour of the customer Pre and Post Recession has not shown a significant change.

Factor Analysis

ost R ecession


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*MHI Shift Post Recession Cross tabulation

The above figure shows that 96.3% people with Income > 1Lac did

not shift back to other affordable products Post Recession. We can inferfrom the above table that 33.3% of people with Income


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*MHI Shift Post Recession Cross tabulation

a. 2 cells (20.0%) have expected count less than 5. The minimum expected count is3.02.

AnalysisHo: Consumers have shifted post recession depending upon their MHI.H1: Consumers have not shifted post recession depending upon their MHI.Chi Value( ) : 17.523 Table Value: 9.49 Table Value < Hence we reject the Null Hypothesis Ho and we conclude that Consumers have not

shifted post recession depending upon their MHI.a.b.

Cross Tabulation Analysis

-hi Square Tests


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*MHI Shift Post Recession Crosstabulation

a. Not assuming the null hypothesis.b. Using the asymptotic standard error assuming the null hypothesis.c. Based on normal approximation.

AnalysisAs the correlation coefficient value is -.237, it indicates that as the income increases there is no change in the

buying behavior of the consumer so there is a negative correlation between the two.


y mm et ri c M ea su re s


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Correlation of Working Profile with the,shopping pattern of consumers in Kirana

,Modern Format MallsPre Recession Kirana



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,Modern Format MallsPre Recession Modern Format



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,Modern Format MallsPre Recession Mall

Th e inferen ce w e can m a ke from the ab ove three tab les b etw ee n the Sh op ping pa ttern of con sum e rs an d the ir. % . % W ork Profile is tha t 50 4 of pe op le w orking Full tim e prefer sh op ping at K iran a Stores w hile 40 7 of N ot

. W o rkin g p op u lation also p refers w orkin g at K iran a S tores K iran a Stores are ea sily acce ssible an d w ith in ea sy. . %rea ch of the po pu lation Th e second inferen ce that w e can m ake from the ab ove tab le is tha t 56 3 of pe ople

. % -w orking Full tim e prefer sho p p in g at M od e rn Form at w hile 3 7 5 of N ot w orking po p ulation p refers sho p p ing at. . % . %M od ern Form at Stores 6 1 5 of Fulltim e w orking po pu lation prefers shop ping at M alls an d 30 8 of N ot w orking

.p op u la tion p re fe rs sh opp in g a t M a lls



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,Modern Format Malls C h iS q u are Test

A n a ly sis:o B u yin g b eh av iou r of cu stom ers in K iran a S tores is no t d ep en d en t o n th e w o rk p ro file p re rece ssion

:1 Buying behaviour of customers in Kirana Stores is dependent on the w ork p ro file p re rece ssio n(C hi Va lu e : .3 416

: .Tab le Va lue 7 8 2>Tab le Value

.H en ce w e accep t th e N u llH ypo th esis H o H en ce w e con clu de tha t B uy ing.b eh a vio u r o f cu stom e rs is n o t d ep en d en t on th e w ork p ro file p re recession

Chi Square Test


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,Modern Format MallsSymmetric Measure

A s th e co rre la tion co efficien t va lu e is . ,099 it in d ica tes th a t th e re is m in im a l o r no co rre la tion b e tw een B u yin g b eh av iou r of custom ers

.an d w ork p rofile S am e re su lt can b e seen p re recession in th e case of B uy ing be h aviou r of custom ers from M od ern Form at an d.M alls

Correlation Coefficient Analysis


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,Modern Format MallsPost Recession Kirana

Cross Tabulation


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,Modern Format MallsPost Recession Modern Format

Cross Tabulation


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,Modern Format MallsPost Recession Mall

Th e in feren ce w e can m ake from th e a b ov e th ree ta b les b etw ee n th e S h o p p in g p attern o f. %con sum ers an d the ir W ork Profile is tha t 5 2 8 of p eo ple w orkin g Full tim e p refer

. %shop p in g a t K ira n a S to res w hile 3 7 7 o f N o t W o rkin g p op u lation a lso p refe rs w orkin g a t.K iran a Stores K iran a Stores are ea sily accessible an d w ithin easy rea ch of the

. . %p op u lation Th e secon d in feren ce tha t w e can m a ke from the ab ov e tab le is th at 5 7 0 of. % -p eo p le w orkin g Full tim e p refer sh op p in g at M o d ern Form a t w h ile 3 7 7 of N ot w orkin g

. . %po pu lation prefers sho pp ing at M od ern Form at S tores 62 0 of Full tim e w orking. %po pu lation prefers shop ping at M alls an d 31 0 of N ot w orking po pu lation prefers

.sh op p in g a t M a lls Cross Tabulation


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,Modern Format MallsChi Square Test

A n a ly sis:o B u yin g b e h a viou r o f cu stom e rs in K ira n a S to re s is n o t

d e p e n d e n t on th e w ork p ro file p ost rece ssion:1 Buying behaviour of customers in Kirana Stores is

d e p e n d e n t on th e w ork p ro file p ost rece ssion(C h iV alu e : .3 416: .Tab le Va lu e 7 8 2>Tab le Value

.H en ce w e acce pt th e N u llH ypo th esis H o H en ce w e con clu d e th at B u yin g b eh av iou r of custom ers is n ot d ep en d en t on th e

.w o rk p ro file p ost re ce ssion

Chi Square Test


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/ /More preference to Deals Discounts Comparison*post recession Age Cross tabulation

, . %From tab le 1 w e can infer tha t 3 9 5 of the p op ulation in the A ge- . %grou p of 0 2 9 yea rs and 36 9 of the po pu lation in the A ge grou p of

- / /30 3 9 years prefers D ea ls D iscount C om parison Sh opp ing Post.R ecession W e can also com preh en d from the tab le tha t the Youn g

/ /p op u la tion m a in ly p re fe rs D e a ls D iscou n t C om p a rison S h op p in g Po st.R ece ssion

Cross Tabulation

0 1 2 3 4 Tota l M ore p refe re nce to/ /D ea ls D isco u n ts C om p ariso

n Po st R ece ssion

0 %C oun t w ithin M ore preference to

/ /D ea ls D isco un ts C om p ariso n Po st R ece ssion

1 8. %3 9 1

1 6. %3 4 8

1 0. %2 1 7

2. %4 3

0. %0

4 6. %1 0 0 0

1 %C oun t w ithin M ore preference to


7 7. %3 9 5

7 2. %3 6 9

3 6. %1 8 5

9. %4 6

1. %5

1 9 5%1 0 0

Total %C oun t w ithin M ore preference to


9 5. %3 9 4

8 8. %3 6 5

4 6. %1 9 1

1 1. %4 6

1. %4

2 4 1. %1 0 0 0


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/ /More preference to Deals Discounts Comparison

*post recession Age Cross tabulationAnalysis Ho: Good Deals, Discounts or Comparison

Shopping does not depend upon age groupspre recession

H1: Good Deals, Discounts or ComparisonShopping does depend upon age groups prerecession

Chi Value( ) : .499 Table Value: 9.49 Table Value > Hence we accept the Null Hypothesis Ho. Hence

we conclude that Good Deals, Discounts orComparison Shopping does not depend upona e rou s re recession.

Chi Square Test


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across categories

Percentage Analysis

Shift i C t g i


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Shift in Categories

S ig n ifica n t freq u en cy red u ction s( . %),see n in R estau ran ts 9 0 1 6

( . %)H olid ay Trip s 8 9 63 an d M ov ies( . %)82 21

Q u an tity red u ction s h ig h est in( . %), ( %)Petrol 6 8 8 3 E lectricity 5 5

( %)an d Ind ulg en ces 50

B ran d Sw itch in g m ost p rom in en t in

( . %),G roce rie s 76 92 A ppa re l( . %) ( . %)70 87 and Cosmetics 54 35

Percentage Analysis

S it h b k t i


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Switch back post recession

Tra din g d ow n an d p ost recession sw itchin g b ack h ave occu rred m ost

sig n ifican tly an d:con sisten tly in

: . %A p p a re l S h op p in g 5 0 8 T D. %an d 3 9 2 TU

: . %M ovie s 4 9 2 TD an d. %3 9 2 TU

: . %R e sta u ra n ts 4 8 8 T D a n d. %4 1 2 TU:TD Trad in g D ow n:TU Trad ing U p

Percentage Analysis


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Luxury goods should be promotedaggressively

More options in leisure goods andindulgences

New strategies should be introduced in themarket to make it economical for thecustomers.

Economical sub- brands should beintroduced

Various lucrative discounts and offers to be

introduced to attract customers.

Suggestions


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ReferencesAccenture (2009 ), The Road to Recovery A report on consumer behavior in the new economy.

Alix & Partners (2009), The Alix Partners European Economic Outlook(SM) survey.

Arussy, Loir. CRM Magazine, Jul2009, Vol. 13 Issue 7, p12-12, 1p.

Brown (2010), Milward. Post-recession Marketing: Addressing a New, More Mindful Consumer.

Chatterjee, Satyajit.(2009) The Peopling of Macroeconomics: Microeconomics of Aggregate ConsumerExpenditures. Federal Reserve Bank of Philadelphia Business Review , Quarter One, pp. 1-10.

Christopher D Carroll, Jeffrey C Fuhrer, David W. Wilcox.(December 1994), The American EconomicReview, Vol 84, Issue 5.

Consumers in a Post Recession world (September 2009). A Nielsen Report.

Ducasse, Patrick, Cliff Grevler, Carol Liao and Catherine Roche(2010). A New World Order of Consumption- Consumer in a Turbulent Recovery. BCG Publications.

Dynan, Karen. Changing Household Financial Opportunities and Economic Security. Journal of Economic Perspectives , Fall 2009,vol. 23, no. 4, pp. 49-68.


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trading down behavior post recession

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